Details of the twice-yearly indexation of the Age Pension and other government support payments have been announced with advocates again lashing the system that leaves pensioners playing catch-up.
Paul Versteege, policy manager for the Combined Pensioners and Superannuants Association (CPSA), and National Seniors chief advocate Ian Henschke say the twice-yearly adjustments leave pensioners vulnerable and advocate more regular reviews, especially during times of high inflation.
Government payments are indexed in March and September to keep pace with rising cost-of-living pressures. In total, around 4.7 million Australians will receive increased payments when the indexation takes effect on 20 March.
But older Australians may have expected a bigger increase. The 3.7 per cent rise, based on the Consumer Price Index and other cost-of-living measurements, follows a 4 per cent rise in September 2022. Inflation is now 7.8 per cent – higher than in September last year.
The Age Pension, Disability Support Pension and Carer Payment will all increase by $37.50 a fortnight for singles and $56.40 a fortnight for couples.
That will bring the maximum fortnightly pension payment, including the pension and energy supplements, to $1064 for singles and $1604 or couples.
In addition, the rates for Jobseeker will go up by $24.70 per fortnight to $701.90, while a couple on those payments will see a $22.50 increase up to $639.10.
The full suite of Age Pension payment and supplement and rates and changes can be found here.
While any increase is welcome, Mr Versteege says the increase may be a case of too little too late as the indexation is responding retroactively to the economic climate.
“Today’s pension increase announcement is as expected, but it is important to realise that it compensates pensioners for cost-of-living increases between July and December last year,” he says.
“The increases will start to be paid on 20 March, almost nine months after the start of the indexation period and three months after the end of it.
“Meanwhile, people on just the pension have had to deal with a significant loss in their pension’s purchasing power, which we estimate at between $300 and $375 from 1 July 2022 to March 2023 for people on just the pension.”
The CPSA is pushing for the government to not just increase indexation amounts, but also increase indexation frequency as well.
“We call on the government to increase the frequency of special security payment indexation, from half yearly to quarterly, and also to speed up paying these indexation increases.
“CPI [Consumer Price Index] figures were published in late January. It isn’t until two months later that indexation increases are actually paid.”
Mr Henschke says the federal government should index the pension every three months during times of high inflation to help those most vulnerable.
“Pensioners will welcome today’s increase yet rightly worry there won’t be another rise in payment until September,” he says.
“They’ll have to wait six months and then play catch-up again.
“The increase in pension is because the cost of living has been driven by an inflation rate of 7.8 per cent over the past six months.”
Mr Henschke says it’s critical during times of high inflation that the pension be adjusted four times a year instead of two.
“For pensioners struggling to cover necessities such as food, fuel and electricity, how often is as important as how much,” he says.
Social services minister Amanda Rishworth says the government is doing what it can to support Australians doing it tough.
“Australia’s social security system exists to support our most vulnerable citizens, and we know they are feeling the pinch,” she says.
“Indexation is a pillar of our social security system and we want more money in the pockets of everyday Australians so they can better afford essentials.
“The increase is an important part of the system and helps those doing it toughest.”
For those renting, maximum rent assistance for singles will increase by $5.60 to $157.20.
For a renter with one or two children, rent assistance will increase by $6.58 to $184.94, while renters with three or more children will receive a $7.42 increase to $208.74 per fortnight.
Later Life Advice founder Brendan Ryan told News Ltd that given the impending increases, it was vitally important that older Australians’ personal financial details with Centrelink were up to date.
“If your asset position has changed, an increase in pension is going to be amplified,” he said.
Are you happy with the pension increase this time around? How often do you think pensions should be indexed? Let us know in the comments section below.